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Hello, Link Assistant, I got the key code, and I am totally, confused does it work with the free version , or would I need to upgrade?

Yes, it works in the free version. Please note, however, that the free version does not allow you to save projects or copy/paste gathered data from the project workspace:
http://www.link-assistant.com/features- ... tions.htmlSo you might want to get the Professional version in order not to lose your progress.
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Do I open Rank Tracker to add the code, or would it go into another program?

You can use it in Preferences -> Search safety settings CAPTCHA settings of each tool of SEO PowerSuite. Only please make sure that the CAPTCHA usage statistics might not be refreshed until you restart all tools after use.
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I also, have another question it seems the free version does not calculate KEI, I guess that means I would have to upgrade is that correct?

The free version is supposed to calculate KEI. Try entering a Google AdWords account (free to get) in Preferences -> Google Account settings.
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This lead me to learn everything SEO and SEM. Do I need to have my own website to use your tools? I was thinking of getting my list of keywords narrowed down based on my experience, then build a website around my USP and Keyword list. I thought of starting with Weebly, as I can't really, overspend myself and hire an independant hosting service to help me install wordpress.org at this time.

You can surely do keyword research, onpage optimization and link building using a free site. You could use not only weebly but blogger.com, Wordpress.org or start with a squidoo lens or a hubpage.
However best results are achieved with a stand-alone sites pn a reliable hosting, so once you make some money you can consider investing it into that.